EC: Military pensions must be reformed along with special pensions

Military pensions must be reformed, together with special pensions, and Romania must fall within the percentage of 9.4% of GDP, in the pension chapter, from next year, the European Commission claims. The ceiling of 9.4% of GDP for pension expenses “is part of the measure regarding the reform of the public pension system. This measure provides for the adoption of a new law on the pension system”, which “will replace the current pension law (Law 127/2019)”.

“The Annex to the Implementation Decision of the Council approving the evaluation of Romania’s plan states that ‘An aim of the new law must be to maintain the total expenditure on public pensions (including all existing public pension schemes) stable in the long term (2022-2070 ) to 9.4% of GDP”, EC sources said.

They remind that the approval of Romania’s PNRR “stipulates the milestones and targets, legally binding, related to various reforms and investments that Romania must fulfill in order to receive the appropriate payments”.

The sources also said that, according to the Annex to the Implementation Decision of the Council approving Romania’s PNRR, the deadline for the new pension law is the first quarter of 2023, and the assessment of the fulfillment of this milestone will be carried out by the Commission in the context requesting the fourth payment request.

However, Romanian PM Nicolae Ciuca contradicted the European Commission, saying that military pensions are not special, but they are based on contributions.

“When I held the press conference during my visit to Brussels and following the meetings I had with European officials, including the President of the European Commission, I presented that one of the topics discussed was that this ceiling of 9.4% of GDP for pensions can be replaced by another indicator, of financial discipline, which is provided for in the PNRR, being the milestone that obliges us to carry out the pension reform and at the same time we are also discussing a another milestone that obliges us to carry out the wage reform as well. Regarding military pensions, we also discussed this topic, including with the representatives of the Commission, who were on a technical visit to Bucharest last week or two weeks ago, and we discussed the report presented by the World Bank, in the content of which is written very clearly that military pensions do not belong to the chapter of special pensions and belong to the chapter of service pensions. Military pensions have been modified by law and are on a contributory basis,” said the Romanian PM.

At the end of October,  Ciucă also said that, following discussions held in Brussels, it was concluded that “adjustments” need to be made to the National Recovery and Resilience Plan (PNRR), showing that there is no time for renegotiation, because it would mean a waste of time and resources. He also said that there was a “principle” discussion about the ceiling of 9.4% of GDP assumed by the PNRR for pensions.

The Minister of Investments and European Projects, Marcel Boloș also stated that a “disruption of our national defense system  is appropriate”.

Let’s see how we will be able to manage the discussion between the European Commission and the final form that the normative act on special pensions will have. It is clear that the milestone has until the end of December. We will have to have some form of this normative act in order to start discussions with the Commission and clarify the form in which the milestone considers it closed. If we look at the current situation that all the member states have, I don’t think an upheaval of our national defense system is appropriate“.

The Government’s plan to reform special pensions provided for phased changes, over a period of 10 years, and involved increasing the retirement age, but also reducing the amount of pensions, in relation to gross income. No pension will be higher than the salary taken in hand, it will no longer be allowed to take a special pension after only a few years of work in a certain field, and the pension will no longer be calculated based on the average of a few better paid months and with growths.

The military were not included in this project, because the World Bank very clearly recommended that the Government not intervene in military pensions. The WB says a proposal to cut benefits could trigger an exodus of military personnel at a time when there is a war zone close to Romania.

ceilingEuropean CommissionGDPmilitary pensionsPNRRreformedRomaniaspecial pensions
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